Exposed! The MMM Family’s 2013 Spending!

Mr. Money Mustache carries the first wall of the new roof structure into place. A great start to 2014.

Luxury, luxury, luxury. What a strange and grand country this is, where the necessities are virtually free, so we end up spending most of our income on optional luxuries in the quest for ever-fancier pants. The Money Mustache family is no exception, and 2013 was another tight navigation along the border between “Enough” and “Too Much”.

Imagine that Bill and Melinda Gates had come over to your house for dinner yesterday evening, and just before leaving they slipped you a little envelope containing a credit card with your name on it. It came with a $100,000 monthly limit, and the understanding that you’d never see the bill – it would be covered in perpetuity by the generosity of the Gates family. How would your spending change?

Even with much lower income than that, I have been forced to consider this scenario, because for practical purposes we’re finding ourselves in the same boat. Our surplus in savings and income grew again this year, and the gap between this and our spending became embarrassingly large. This gave me a chance to re-evaluate all of my frugal roots. Was I really doing all this stuff because it makes me happier, or was some of it just because of the money?

So we cut loose a bit. Never thought twice about buying a pack of beer to bring over to a friend’s house, browsing the gourmet cheese section at the hip new grocery store that opened up in town, taking a trip, or inviting crowds of people over for elaborate meals. We hosted a steady stream of out-of-town visitors, providing food and entertainment and hospitality. Upgraded work boots and worn clothing with abandon, and gave gifts and donated time and money whenever it seemed appropriate. I even upgraded my kitchen sink.

On the other hand, many things did not change. I didn’t abandon my trusty commuter bike and become a Car Clown, because cycling is genuinely a much happier thing to do than driving. Kept building things, because carpentry makes me happy. Didn’t buy a bunch of new gadgets and furniture, because simplicity is a better daily habit than cluttering up one’s living room with a Hedonic Treadmill. And we took fewer trips this year, because we love where we live and now have many close friends here. While vacations and tropical beaches are fun, it is always worth considering what you are leaving behind. A better home life creates the desire for fewer vacations.

I don’t do any budgeting or track spending through the year – we just let the cash fly and add it all up at the end. So I was sure we’d blow our reputation this year and I would have to report back to you with an embarrassingly middle-class exploding-volcano-of-wastefulness figure.

Our spending, broken down graphically in Mint (click for larger)

The net result of all this? Our total spending for the year increased by $140, to a grand total of $25,142*

Category

2012

2013

Comments

Mortgage Interest

0

0

Property Taxes

2,358

2,517

Looking forward to a drop next year in the new, smaller house!

Food and Dining

6,238

7,739

This is where our flashy spending really showed up.

Groceries

5,733

6,984

For this we can blame the new Lucky's Supermarket, and loads of houseguests and parties.

Wine/Beer

280

466

Although the category has increased, $150 of this was a gift to a friend. Getting your good wine in boxes really helps in this department.

A bit more roadtripping this year, including destinations in Canada and Utah/Nevada.

Insurance

313

330

Registration & Testing

217

294

Express Tolls

79

80

Speeding Ticket!

75

n/a

Service & Parts

169

422

I enjoyed my first mechanical problem this year on the 1999 minivan, but managed to fix it. See article How to Fix a Car

Public Transportation

n/a

81

While I'm in favor of public transport in principle, I find I never use it in practice, because bikes are faster, cheaper, and better for you for typical intra-city distances.

Utilities

1,463

1,649

This includes natural gas, electricity, water, sewer, trash, recycling, and some other city services. Our usage dropped slightly, but rates rose a bit and some of this was startup fees for the new house.

Cell Phone

240

300

These days I get free phones, but this is the annual cost of a single unlimited smartphone from Republic Wireless. Or two phones with unlimited talk/text but wi-fi data only.

Internet Access

360

360

(not included in mint charts)

We keep this cost down by sharing a high-end connection with a friend: (see article)

Home

2,556

775

Home Renovations

2,147

383

My only house expenses this year were a new kitchen sink and a bath faucet.

Home Insurance

353

392

Landscaping/Plants

56

85

Donations/Charity

1,734

615

Personal donations only (business including this blog donates separately).

Crossfit

1,175

650

We managed to chop this down by setting our own garage up as a gym, and inviting friends over for free workouts.

Really you could subtract $1200 from this, which is the statement credit we got from various rewards credit cards. This figure also includes the experiment where I tried to Waste $1000.

TOTAL

25,046

25,182

Subtracting Tuition, Donations

22,202

24,567

Subtracting travel, crossfit

19,151

21,983

Subtracting organic/luxury food

17,259

19,678

Assuming a 33% increase on groceries due to organic + meat.

Subtracting home renovation expense

15,112

19,295

This is what our "no frills" living cost would be, unless we moved to a smaller house (Note: Misc category could be cut down a lot as well)

As it seems to happen every year, things changed, but we spent about the same amount. And life went on just fine. I think it’s because spending is more of a habit than a conscious effort – if you just develop the habit of spending the right amount for your own needs and savings goals, everything else takes care of itself.

Here’s to a prosperous 2014!

How to track your spending: We do almost all spending using a good cash-back credit card, and let the Personal Capital and Mint apps automatically categorize everything and display it in pretty pie charts and percentages for us. As a non-budget person, I find this method of tracking to be revolutionary, as it happens even when you are busy living life and forgetting about money.

*Note: I did not include any costs related to rebuilding our new house in this total, which so far have added to about $25,000 including things like engineering, permit fees, steel, lumber, electrical and plumbing parts, kitchen cabinets, and all new windows and doors. This is because the end result will be selling our current house and ending up with $100k to spare from the transaction. It’s more of an investment than a spending spree, although it sure feels otherwise when all these cardboard boxes keep arriving on the job site.

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Since investment expenses and income taxes can be significant amounts, I have recently started to track those each year as expenses and then look for ways to reduce them. By restructuring our investment account, I was able to expose the fees and can now claim them as an investment expense on our Canadian income tax. Your Mr Frugal Toques blog posts were very interesting reading and I echo his encouragement for everyone to learn about MERs (Management Expense Ratios). Like him, I ignored these for too many years.

Thank you for your continued and interesting MMM postings. All the best in 2014.

I am also curious how business and non business income and expenses are broken out. Also, I am not sure how MMM comes to 383 for home renovation, when in his Dec 2013 post he says
“materials, and supplies are needed in abundance for a project like this, and so I’ve spent about $20,000 in the past three months.” I understand simplifying for the sake of clarity, but for someone like me who does include home renovations in the expenses category it would be nice to have fuller disclosure.

As far as donations, I really don’t see how that is really anybody’s business. My view, the way that MMM lives and what information he shares IS a public service, inspiring many to live better lives as well as reducing waste on this planet. And that’s something you can’t put a pricetag on.

The note at the bottom of the post explains that the money we spent on our new house is not included in here. We really did spend only 383 on our main home renovations this year, but obviously much more than that on our new house.

I’m an addict re: this blog – the insights have stopped me from buying a big BMW and other stupid stuff I won’t go into – and since it has a great philosophical bent to it, I thought I’d hit everyone up with a philosophy question about spending beyond 25K. My fiancé and I are about 2-2 ½ years away from reaching what I would call “theoretical FI” or about 900k in net worth. And for the record, we like Colorado, so moving there with a 25k-per-year lifestyle is quite feasible, although I’d want to check out Utah before committing.

But instead, this is our backup plan. Our “Plan A” once we hit FI is to find new jobs in, and move to, the Bay Area/Silicon Valley, perhaps the second most expensive area in the United States. We want to move there for the climate, the proximity to the Pacific Ocean, the culture, etc… typical reasons. We love it. And since we want to live in a single family home, the 900k will pretty obviously not be enough.

My question: is this type of spending really just another form of indulgence subject to hedonic adaption? Is it really just like buying a big BMW, only in disguise? I know that many people move to California and then leave a few years later, having worn out the novelty of living there and grown tired of the traffic or the fact that they can’t save any money. We are convinced that we are different and that the move would make us happier. But lots of people are convinced that a big BMW would also make them happier, and they’re often wrong. Thoughts?

I was born and raised here in what is now called Silicon Valley.
I also work in high tech. I can tell you that even though people who’ve done their research know that the Bay Area is incredibly expensive we still see sticker shock in their eyes even after they move here!

To give you an example. My house (in a desirable part of San Jose) is 1200 square feet, 2 bed 1 bath and would sell for about $1.1 million, if we were to sell. Crazy? We’re fortunate, we bought a long time ago.

We don’t have children but schools can be prohibitively expensive (pre-school, private,etc. IF you can even get them in).

But I wouldn’t live anywhere else. 20 minutes to the beach, to the mountains, a great City and fabulous weather year round. Worth every penny to us.

I was also born and raised in Silicon Valley too. We go way back–when it was still orchards. Our small 1400 sq. foot house has a property tax bill of 7K a year. The one that is comparable across the street just sold for over 1.1 million. My husband retired 1 month ago. I am still working part time because I have satisfying work and a very flexible schedule. We can now move to a less expensive area, if needed, since I work remotely, and we don’t need to be 3 miles from the Apple campus anymore. But, if you work in tech this is the place to build a career.

The bad news is that you don’t have enough money to retire in the bay area. My son and his wife live there and follow the MMM lifestyle (they have a high income). Housing there is a killer. They were “lucky” to find a one bedroom apartment for $3000 a month, prior to that they were sharing a place with 6 friends to save more money, but they decided that they really wanted to have a place of their own.

It’s OK to move to Silicon Valley even if it is more expensive. You have clearly thought it out and recognize the opportunity cost (no FI for you) of moving. You’ve taken reponsibility and are owning the decision. You are not the MMMs but there are many paths to a happy life. Sounds like you are choosing one.

I love this website and totally appreciate the MMMs sharing their expenses and insights even as I realize I am not yet to a place where I am willing to relocate and/or cut back in the same way they do. I live about 2 hours north of Silicon Valley — cheaper than Silicon but I have noted our flat rate sewer bill alone is just about equal to the MMM’s entire utility bill. But I am willing to pay the higher cost of living and defer full FI at least for now because the kids are doing well in this community and we love our community tribe. The climate is nothing to sneeze at either. We are happy.

Having said that, this website has really helped me relook at our expenses — we shaved $7,000 off our 2013 expenses compared to 2012 and saved that 50% and I only discovered MMM in May. I have big plans for 2014 but we’ll still be in this expensive area of the country. No apologies.

You may be able to find more affordable conditions in the Bay Area, if you are a bit flexible on your location.

We had friends that lived in Oakland near the border with Berkeley. They lived in a pretty urban area so there were lots of shops and a farmer’s market nearby and the train to SF was only a couple blocks away. It seemed like a pretty bike-able area with bike lanes and such.

To me, it seemed like their place was near the border of a poorer neighborhood but I never heard them complain about crime. They said they really liked the neighborhood.

And my impression was that it was pretty reasonably priced as they lived in a pretty big apartment but didn’t have especially high paying jobs.

LoneStarStateWorkerBee, I agree with others who have posted. As long as you are willing to keep a VERY open mind on how many square feet you need to live in (it’s probably way way less than you have in TX!), living in CA is great. Yes, it’s a pain to have crowds everywhere you go (our closest grocery store has valet parking on the weekend, no kidding). But the weather and the outdoor lifestyle is incomparable. Here in San Diego we have mountains, gorgeous desert canyon wilderness, and the beach all within 2 hours drive or less. We will even retire here, although the costs, not just for housing, are so high. It just depends on your priorities in life.

I love these series of posts. They’re great to smack around the whiners of the world – I need a bass boat, I need a big truck to pull the bass boat, I need a harley, I need cable, I need the latest fall (or spring, or summer) fashions….

My target FI budget is on the same order of magnitude as yours. As I’ll be solo instead of 3, it’ll be sickeningly indulgent. Yet, when I throw out your absolute number (e.g. $25k) people think you’re poor.

I pity those people who think you, Mrs MM and Jr. Stache are poor….then…just….don’t…..get……it. Happiness / richness / true wealth is not equal to how much money you spend.

I would like to know how you have a $300-$400K home with house insurance of $392. Seems like we pay around $1100 or more. I assume you have a high deductible but that seems awfully cheap. There may be enough there for an article just in itself!

This post was particularly exciting for me because it marks a year since I started reading this blog and reducing my own spending beyond what I ever thought possible. Thank you for what you are doing!

By the way, I find it fascinating that your spending (not accounting for the mortgage in earlier years) has stayed relatively constant since 2010 despite a banner inflation number of 7% since that time. I have read many accounts that inflation is overstated for those who live frugally (e.g. Your Money or Your Life, the MMM forums, ERE) but I think this is the first time I have seen it demonstrated in actual figures.

Unreal how many comments about the donations! Didn’t think twice about it.

I am a teacher, I spend most of my time outside of work helping students. I volunteer every once in a while with an Americorps program I did, also on the alumni board of it. I donate every once in a while to different charities my friends are associated with it, but that’s it. And I’m a bad person according to some of you? Get real and get a clue.

After reading almost all your posts like some kind of crazy person about six months ago, I decided to leave my high-stress, low-paying job and my car clown town (Phoenix, AZ) and moved to Madison, WI… the place I really wanted to be. I got a higher paying job here with benefits and I now bike to work. I started budgeting on Mint and quit blowing so much money on eating out, starbucks, and shopping.

This week I hit a milestone by finally paying off the student loans I’ve had since I graduated in 2007.

Shelly, congrats on paying off your student loans! That’s HUGE! I’m worried about your comment about Phoenix being a car clown town, though. That’s one of the places I was considering moving to escape the Michigan winters. Is the biking infrastructure THAT bad?

Great story, Shelly. It’s great to hear all the ways that ideas and words have inspired people to change their lives. I shared MMM with my brothers, and one of them got rid of his clown car, bought a bike, and moved close to a bus stop. I can only imagine how awesome it must be to be the MMM family and read all these accounts of how they have influenced the world.

RE: the attacks on MMM’s giving.
As Benjamin Graham would say, “Price is what you pay, value is what you get.” All of the millions of people positively affected by MMM’s work could have been charged one dollar. By foregoing this charge, MMM has effectively donated those millions to the common good. But a more realistic estimate would be that the value of MMM’s work to his readers is several orders of magnitude greater than one dollar each. My God: Is it possible that MMM has given over a billion dollars to the common good???!!!! Yes.

When I looked at your pie-chart of expenditures, my first thought was “where’s the cost of accommodation?”. Economists love to talk about “imputed rent”, which is the hidden rent a home-owner pays to himself for living there (the rent he has to give up, because he lives in his house, rather than renting it out to another). I see you did touch on this in your reply to Rebecca on 12 January 2014.

I appreciate that if one doesn’t live in one’s own home, one has to rent somewhere. On the other hand, if one doesn’t live in one’s own home, one doesn’t have to tie up hundreds of thousands of pounds, dollars, thalers or ringgits in real estate: that capital can be employed to earn other returns.

All I’m saying is that we must compare like with like; otherwise we get magic accounting where one’s wealth suddenly increases the day one buys a home and stops paying rent. Either renters should deduct the returns on their accummulated capital from their rent to compute their net housing cost, or homeowners should fully account for the value of the accommodation thrown off by their substantial real-estate investment, in order to compare expenditures on a level playing field.

Another way of looking at that same question is to count the money MMM is not earning in interest from the capital he has tied up in his house. If the house is worth 400k, then that is approximately 16,000 per year assuming he’s withdrawing money at the 4% safe withdrawal rate. That amounts to $1300 per month in “rent”. That is a lower bound–if that money really were invested, it would be earning more than 4% and recapitalizing the excess.

It’s so much fun to get a peek into someone else’s spending when people usually like to keep finances hush hush, thank you for putting this together! I especially like the note on taking less vacations and enjoying more time at home & having more parties.

When I saw how little the MMM family spends on eating out, I was shocked… but then I saw the grocery amounts… which are pretty high. So I guess it all balances out in the end. Personally, I prefer to go out a little more and spend a little less on groceries. I recognize this is what I like to do, so I make room for it in my budget and try not to buy too much at the supermarket. I stock up on things like fruit, pasta etc. and buy meat sparingly. Works out for me! It all just depends on your lifestyle and knowing where your largest expenses are. I’m young, with a lot of young friends that like going out to eat so I’ve worked that budget in.

I am so envious of your good habits! I think you’re right about most spending just being a matter of habit. We eat out much too often, and even go to the store too often, simply because we’re in the habit of not thinking ahead far enough. Here’s to changing that in my household this year. Our dinner tonight is in the crockpot.

Love the blog. It’s helped me a ton in life to cut spending and I now feel more in control of my life.

Can you do a blog entry on how you do taxes with the investment accounts? If you did explain this in a blog can you please point to it for me. I want to understand how you investment money and then pull it out at 4%, and then how do you do the taxes on that? thanks!

All the donation comments are ridiculous–especially the folks who didn’t appear to read MMM and Mrs. MMM’s replies, or understand how much they donate through volunteering or their business even though that’s clearly explained. WTF. They donate a lot! So the rest of this comment will seem a little strange.

I’m struggling to put my idea into words, but as I spend more time in the wilderness or backcountry, I think that being self-sufficient is the biggest gift you can give to your fellow travelers. If you can keep yourself fed, warm and dry in all situations, and make decent decisions, then you almost certainly won’t need to be rescued and therefore won’t put anyone else at risk. I think that kind of gift/resilience is deeply honorable to the community in a way that “charitable” giving isn’t. I don’t care that you brought an extra cliff bar to share if you’re about to trigger an avalanche, or can’t take care of a broken leg, or have a debt on fire emergency.

Like I said, I’m strugglingly with the metaphor, but I would happily live in a society where everyone dedicated themselves to an MMM-level of self-sufficiency, and no one ever donated anything.

Also, the charitable tax deduction in this country is an inequitable load of horseshit that the wealthy use to rob of the poor of government services in order to fund art museums and multi-billion college endowments. /personal rant.

Interesting comment. Self-sufficiency is something my partner and I are striving for too – not just in the backcountry etc., not just financially, but being able to create the things we need (e.g. learning skills like welding, sewing, woodworking), being able to maintain the things we have (like machinery, house), and being able to produce all our own food. Of course, part of self-sufficiency is really being part of a community. You can be theoretically self-sufficient, but if you are part of a community of self-sufficient people your community’s resilience and capacity to overcome obstacles increases exponentially – and a community that can care for others without strain is really something to value. Not everyone is capable of being self-sufficient, for a whole myriad of reasons from disability to mental illness to simply lacking or being unable to learn the skills. Even in an ideal world where we were free from the pernicious cycles of poverty (which rob people not just of money and comfortable lives, but of the opportunity to learn the ‘soft skills’ that are needed to even begin pursuing self-sufficiency, like confidence, managing interpersonal relationships, and the ability to learn) there would be a need for society to take care of some of its members. My view, however, is that this is the role of government, not the role of charity. It should simply be a basic part of everyday life, an expectation that you take care of each other, not that those in need have to rely on the kindness of strangers. Of course, I’m Canadian. Americans do not seem to be so on board with this idea. ;)

For sure. I get what you’re saying. The self-sufficiency kind of falls apart when you poke it. After all, it’s not like when we go into the backcountry we carry gear that we made ourselves.

I also agree that it’s the role of government to do a lot of the heavy lifting in carry for the most vulnerable members of society–that’s why I think government work is an honorable calling. For better or worse, many Americans think that charity *always* does it better than government and therefore that’s the route we should go. I tend to prefer government over charity because I think it’s accountable to citizens in a way that charities aren’t. Pretty heavy stuff.

Do you carry an umbrella policy? I keep auto, home and a $1 million umbrella bundled with Country Co., but we pay $2,157 for 3 cars/3 drivers, one of whom is a teenaged male. Cars are 2006 (my Sienna, 2008 (husband’s luxury MB–I know, I know…it’s on the East Coast for his work) and 2010 Forester for airport runs for husband/kids’ use); $1,042 for home policy, $267 for umbrella.

Who cuts you guys hair, especially Mrs. MMM’s? Flowbee for everyone?!? If i overlooked it in the budget, my apologies. I had a great haircut just this past week (by a professional trained to do so), that I could never reproduce myself to the same quality. A great haircut is good for the soul and lifts spirits. But I bring this up because even frugal establishments aren’t cheap and would certainly be itemized in a budget.

Yup, I cut the men’s hair in our house, and Mrs. MM either does an annual haircut (misc category), or cuts her own hair using the amazing upside-down hair/scissors trick you can learn on YouTube. Total spending is $0-$50 per year.

Thanks for the tip about haircuts! I searched around on YouTube after reading your comment, found this video: http://youtu.be/enhkJufoqJ4, and followed the instructions. My new haircut turned out really well, and it was completely free. Thanks!

I heartily recommend going back to the beginnings of the blog and working your way through to the present day, quite a journey & I suspect you’ll have changed your tune by the time you get back here. I’ve been sporting a clipper cut for the last 9 months now ;) love it!

I encourage you to figure out how much you spend on your haircuts, and calculate the compound interest on investing that money instead. That should pretty much cure your schmancy haircut habit…it did for us any way. We are a household of 5 (2 spouses, 3 boys) and our number rang in at tens of thousands of dollars over the next decade or two. My husband uses the clippers on the four of them and I get a semi-annual ‘do. Which is actually free for me, because my bestie does it–I know not everyone is that fortunate, but even when we’ve lived far apart, I’d trim it myself, ask a friend/sister, or keep it an annual event. The every 4-6 week “need” to go to the salon actually means, in FI terms, that you need a lower maintenance cut.

At the risk of being flamed…regarding charitable donations, it does not seem to me that giving 10% of ones’ income to a church even counts as charitable giving. It only benefits the church. It keeps the church going. So what? Does it really make the world a better place?

My big extravagance is travel. I love visiting new places and familiar places I love. But I understand and support the concept that if you have a happy social and family life, you do not need to travel to be happy. Kudos to the Mustache family for providing inspiration and motivation to so many. IMO this is as good as any charitable donation.

Over here, in Austria, those “donations” used to carry the name “church tax”. You HAVE to pay it. If not, they come after you and you could even lose their home if you don’t pay that “tax”. They renamed it, now it’s called “contribution for the church”

Ellie,
Keep in mind that when you travel, you pay for food, transportation, accomodation, perhaps a tour guide, or you pay admission fees to see something. All that spending is funding the local economy and providing jobs for the people you’ve interacted with, and contributing taxes to government funded programs. If you travel off the beaten path to less touristy destinations your funds will be going directly into the hands of a community that likely needs it even more. There are also plenty of ways to do volunteer work in communities around the world as part of your travels. Leaving a little sweat equity or an actual cash donation in your wake as you travel the world is a lovely thank you to the people in a place you’ve enjoyed.

Wow! All these comments about the lack of charitable giving on the part of MMM are right on target! Who does he think he is?!?!? So self-righteous! If the whole world gave as little as he did what would happen? Collapse!

That’s just the tip of the iceberg, I say. What about these items:
– Why is he spending so little on dining out? What will the waiters and waitresses live on? What will the local bar owners live on? I bet MMM even tips less than 20%. Damn him.
– Why does he repair his own car? What will the car mechanics do if we all fixed our own cars? We should each send our cars (all 3 of them) to the dealership every 3000 miles for regular service.
– Commuting by bike is just damn un-American. I know a oil-exec or two that or having trouble making a tuition payment for their kid. What about the workers assembling the cars, don’t they need a job, too?
– Working on his own house? HELLO! Housing recession! What will the unemployed carpenters eat for god’s sake, has MMM no mercy?

Not only is his spending on charity too low, it’s too low across the board!

Come on, who’s with me? For example, just yesterday, I threw a crisp $20 at my barrista. After all, she has less than I do, and it warmed my heart to see her smile.

OMG you’re right especially about the unemployed carpenters :( :(
MMM should just stop working and start paying some other people to help the economy already. If we have deflation, I know who I’m blaming!

Wes you are an ANGEL. Thank you for saving this world from chaos and unemployment.

Wes, there are some serious flaws in your arguments. By being retired he’s created a job vacancy for someone else so they can support themself and not be dependent on charity. So he doesn’t dine out much. Is that a bad thing? What’s so bad about eating, not only cheaper but almost certainly more healthy, at home? MMM is a family man, and isn’t it a good thing when family men and women eat at home with family? Often it’s the longest block of time in the day families spend together at dinnertime. Do we really need more restaurants, in miles of urban sprawl which gobbles up many square miles of prime agricultural land in many areas and creates more traffic congestion?
So if people drove less and used less petrol would that be a bad thing? Have you seen the environmental mess in Fort MacMurray, Alberta that results from our bottomless pit demand for oil? Neil Young has received much criticism (mainly from the oil industry, of course) for bringing attention to this mess, but if you take the time to hear him out he makes some valid points. How about people complaining about contaminated well water in places like North Dakota where fracking is going on? How about the fires from trains that derail carrying this highly flammable crude oil? The worst was Lac Megantic, QC where 47 people died and extensive property damage occurred. Since that tragic event, there have been crude oil fires from derailments in Alabama, near Fargo, ND, and more recently in Plaster Rock, NB. If we walked and biked more, and used less oil we would be better off and those 47 people in Lac Megantic, QC might still be alive today.

If people drove less, then less cars would need to be built, so what about assembly line workers? In modern auto plants, there aren’t many workers as there used to be due to automation. As for those still on the line, why not have a shorter work week? I live not far from 2 auto assembly plants and would ABSOLUTELY LOVE to work a 3 day week so not only would that create jobs but I would have more time to do other things. it would be a win-win for everyone involved. While on the subject, as everything becomes more automated it inevitably leads to unemployment. In the past the problem has been “solved” with the need for continuous growth and ever increasing consumption of stuff we don’t need. Did it ever occur to you this poor excuse for a system is sick and dysfunctional? In the last century the work week went from 48 or more hours to 44 hours, then became stubbornly stuck at 40 hours and by now it should be 30 hours given the high productivity in this day in age. In summary if everyone were more like MMM or myself we would have a system where everyone had a job AND a life, be healthier, happier, and a much lower environmental footprint. How could that be a bad thing?

Did I miss something? I didn’t read that post as tongue-in-cheek at all. Being a long time mustachian (and for all intents and purposes retired) it’s much like comments I’ve actually heard in my own experience.

“Poe’s law, named after its author Nathan Poe, is an Internet adage reflecting the idea that without a clear indication of the author’s intent, it is difficult or impossible to tell the difference between an expression of sincere extremism and a parody of extremism.”

This year I started eating and cooking at home more than ever in my life. And I love it. Healthier, cheaper, and tastier.

But still drawn to eat out. I usually enjoy the experience, but it disheartens me that I compromise my nutritional standards and even just ordering appetizers the bill can be over $50. Which is $40 too much IMO.

For example, today in SoCal it’s 80D outside and we took our dogs to the Lazy Dog restaurant. I ordered black beans and brown rice as side orders, hummus for an appetizer and my wife’s and son’s meal–$60 with tip.

I stumbled upon this blog a few weeks ago and I have to say, I LOVE taking a shower now. It’s kind of weird but the fact that I turn on a faucet and water of whatever temperature I want on demand IS happiness. :) We truly live in a rich world!

One of my favorite posts every year!
Auto insurance – is that for one or two cars? Collision or comprehensive? Utilities – mine are more than 2x yours. Can you break down usage for the year instead of total cost?
Homeowner’s insurance – about 1/3 what we pay. Ouch. Can you tell me what company you use? I need to make a change.

Home and auto insurance seem to vary substantially between regions. It’s likely you just live in a more expensive area and the only thing you can do about it is relocate to a cheaper area. MMM answers about the auto insurance above – it is for 2 cars, 2 drivers, no collision or comprehensive, through Geico. He also has his insurance providers listed on the ‘MMM recommends’ page.

Glad to hear you are still doing well, but I’ve sort of wondered something for a while. If your finances stay in roughly the same position from now until whenever you pass on or even increase in value, what do you plan to do with all the cash you’ll still have on hand? Presuming of course that you don’t blow it all over the last couple years on expensive and risky end of life treatment to delay the inevitable.

In the same situation I’d want to basically put it all into the most effective altruistic organizations I can find, perhaps research to end aging and malaria, but if you’ve got other plans I’d like to hear about them.

The comments regarding MMM’s charitable giving are ridiculous (as has been previously stated a plethora of times).

The time MMM puts into this blog is worth millions of dollars. Right now if MMM wrote a post asking all of us to donate $1,000 to him for a campaign for public office, I would donate $2,000. After all, he is (for the most part) the reason I even have a $1,000.

I am proud to say that after reading this blog I changed how I thought about money and have changed my life and lifestyle as well. I paid off all my debt and quit my job, my husband is a retired/disabled Marine. We gave up our expensive rental house in Northern Virginia and are living in our RV in my mother’s driveway while renovating her attic into a separate apartment that we will live in. This is a win/win, we are now closer to all of our parents who are aging and in need of more help, we are also closer to all our grown children (and grandchildren) as well. In a few years when our youngest graduates high school we’ll be able to travel the country in the RV and still have a homebase in our hometown. RV travel is OUR lifelong dream, I know it’s not for everyone, being able to retire before we turn 50 and travel before we get to old to enjoy our freedom is all thanks to MMM and this blog. We are LIVING THE DREAM in Virginia.

I’m assuming you don’t have dental insurance and that is fine. If this is the case though, I have a question for MMM or any other reader:

I do have dental insurance which my employer gives me. I was at the dentist last month and they showed me their pricing sheet for a procedure, The costs for paying cash were significantly higher than the negotiated rate with the insurance company. It seems silly that if I’m paying cash, I have to come up with $500, but the negotiated cost with the insurance company was $180. I pointed this out to them and they shrugged.

So, for those who don’t have insurance, how do you find providers who will charge you a reasonable cost if you’re paying cash?

Always ask what the “cash price” is. If they can save the cost/hassle of filing an insurance claim and you can pay with either a check or cash, then the dentist should be willing to work with you. If they won’t then find one who will.

I did some research and found that the contract some dentists sign with insurance companies force them to charge the full retail price for cash payers. If true, this is ridiculous. Surely though, this can’t be the case for all dentists.

I ran into this issue too and was told by my doc’s office that while they can’t discount the rate for being a “cash” or “self-pay” patient, they can legally discount it for same-day payments, (because that saves them from having to send it to coding, then billing, then pay postage, then repeat the process in 30/60/90 days, then the possibility of collections if payment is never received etc). Definitely worth asking about–I believe mine was a 30% discount or so!

My husband and sister’s husband built one together with equipment bought from Rogue and dropped their crossfit memberships. They also bought the rower. Just a few months of not having the memberships made up for the cost, and they consistently invited other people to come share it, which I think is part of why they stuck with it so well– it became kind of a social thing. (I’m using past tense because we recently had to take it down to move for their work, and it couldn’t be set up in our new homes, but the local YMCA was glad to have it set up there, and with a military discounted membership of around $20, including childcare and showers, we still get to use it daily for waaaay less than crossfit).

Funny just yesterday I was adding up what our absolute “minimum” to live on would. I find having just retired (last Thursday) that I have a recurring nightmare about having no job and therefore no money.. So I did some mental math to figure out what our bare min would be based on keeping both our cars plus F250 to pull the horse trailer the 4 miles it does each week. we have no mortgage and provide utilities to one of the rental units.

So many people people who apparently think they should control how you manage your money.
Charity, like any other expense, is a personal decision. As long as you live a productive life you already are contributing to society, and should not be shamed for how you manage your _own_ money.

Oh, and thanks for sharing your household accounting. It’s interesting to compare with our own finances.

I look forward to this post each year. We are getting ready for my husband to retire in a few months at the ripe old age of 46. So, I’m curious about what changes to expect in our spending. Where we could decrease, etc.

You do not list any income taxes on your spending sheet. Is this part of the business expenses (I know you do not list any business related items on this list) or do you not have any income taxes?

Also, do you account for all the misc. cash that runs through your fingers or just what you can realistically track on Mint? Our biggest item is Misc. Cash Withdrawal.

I do count property taxes however, because they are a necessity of living in a house.

We don’t generally pull out much cash for spending – maybe a few hundred a year. I put everything on credit cards myself, because of the rewards points (cash back), the tracking, and the fact that I’m a bit loose with cash when I have it – it feels like free money and suddenly there are pieces of coconut pie and pitchers of beer getting ordered.

Hi MMM, just for a retrospective, when you actually said goodbye to the “reliable” paycheck, was your rental income, dividend income and any other passive income just barely enough to cover expenses? Or you were SURE it would cover expenses? I’m curious if it felt risky at the time.

I see that property taxes in Longmont, Colorado are much, much better than here in Chicagoland where property taxes are high and may grow a lot higher if property tax increases are used to pay off unfunded pension debt (you may have heard about Illinois’ budget woes; well, they exist at every level of government in the State). Because property taxes are such an unpredictable liability here, I have held off on investing in real estate (which I know better than the stock market) because I don’t want to take the risk of even higher property taxes eating into my earnings and lowering the value of my investment property (think Detroit) even though the population of Chicagoland continues to grow and real estate should be a wise move now.

If you don’t mind me asking, what are you estimating the value of your home that will soon be sold so I can do a quick comparison? Is Longmont unusual in Colorado or is Colorado just a low property tax state? If so, what does Colorado (and other low property tax states) do differently than high property tax states like Illinois? From reading your blog, it doesn’t seem like the good citizens of Longmont are forgoing any valuable government services.

Also, is there an online tool that let’s you see property tax estimates in various parts of the country?

Most interesting to see spending broken down for a year. I have kept track of my spending this year and it was a little over $55k. So most inspiring to read yours. I live in BC, Canada so I don’t know how much I can do about House and Car insurance. Things always seem to cost more up here but I’ll definitely look into it. Car insurance has to go through a provincially regulated body called ICBC but I can probably up my deductible and take collision off my car since it is 12 years old now.

My mortgage was $17k so of course you don’t have that. We also paid $5k in tuition for my wife’s college course and $5k in home renovations so we could rent out our basement suite. which is providing income of $600 month already. My brother is the perfect tenant right now. Plus my car had some unfortunate repairs.

If we can find ~$5k in general savings plus the $5k in renovations plus the $5k in tuition we should be able to get our spending down to ~$40k but that is including $17k on the mortgage which means our other expenses will hopefully be around $23k which is surprisingly close to yours. Gives me hope of an early retirement, my wife is expecting to start work next summer when she graduates.

Approximate value of the house is ~$280k so not extravagant.

Of course I suppose we could always sell and buy a smaller house, but it took us 6 months and ~100 houses before I found one I even liked. I can’t help but think housing is on of the most over valued items here in Canada. I rented for 3 years before getting married and I can’t help but enjoy my own house. I got tired of landlords though I suppose they were pretty good in general.

I may have missed it so forgive me if somebody already mentioned this: isn’t true charity supposed to be anonymous? I’m not religious but I believe I remember something from catechism about giving privately, so as not to get any sort if recognition or glory out of it. Maybe that’s why MMM isn’t blabbing about his charitable donations. I don’t see the big deal here.

Agreed, Heidi…the whole “don’t let your left hand know what your right hand is doing.” Giving should be discreet, not prideful. MMM mentioned it in the spirit of full disclosure, and to inspire others to be generous even as they seek out frugality and aspire to be FI. This shouldn’t be a hot-button topic on here…we ALL agree giving is good…no rift needed.

This post came at opportune timing. Been a reader for several months, and as I’ve been lightly coaching people in their finances I’ve found myself pointing people to MMM almost each time.
While I’m not saving as much as MMM would recommend, my wife and I have lived well below our means even while we were DINKs, and continue that lifestyle as we’ve pared down to one income. Yesterday, in a moment of financial weakness, I was feeling good about our savings and charitable giving as a percentage of our income and I started to internet hunt around for things we could buy – and after wasting 15 minutes I realized I couldn’t think of anything. Contentment.

I think that is the big win of following MMM principles…you set lifestyle goals that have a huge financial benefit, and then you end up being content. What I realized yesterday is that it’s not difficult to say no to things. And I think that’s my main takeaway from this post – at some point living well below your means just becomes part of your lifestyle and it is almost hard to spend the surplus that you have.

Thanks for sharing MMM. What really stands out to me are the benefits of frugality in terms of avoiding marginal costs. The more you earn and the more you spend, there are hidden demons that start coming out — higher taxes — unsubsidized health insurance — etc. So it’s MORE than just a linear increase in money that is required to sustain higher spending / earning — because you have to pay for these demons. My obamacare quote for my family is about $800 because we have 3 kids and don’t qualify for subsidies. That’s crazy, I mean our obamacare insurance alone is close to HALF of MMM’s total spending. Makes me want to quit my job and be poor so the gov will pick up the tab for this insurance. So much for incentive to be productive in this country, it’s more like incentive to put my hand out for entitlements. A sad state of affairs.

Hi MMM, where do you put your child’s college savings amount you are/if setting aside for him or ? Will you just add it in your yearly amount spent the years he actually does go to college? Just curious.

If you’re looking for a trustworthy resource on 529s and college planning, I recommend Joe Hurley’s http://www.savingforcollege.com This site has a myriad of articles and comparisons of states’ 529 plans, if that’s the vehicle you choose to use. Some states offer a tax deduction, so you’d want to examine your own state’s plan while exploring alternatives at other states. The key is to start saving early!! We saved from when our youngest was born until last year when he was 12 and I feel that’s enough. The rest we’ll fund from current wages or maybe he’ll be fortunate to receive scholarships (he’s a smart cookie) :)

I have to ask: How do you keep track of all this stuff? I understand the big things, but do you write down each time you go to the café? Please share your process. I’m a frugal lifer like yourself and busted out of my soul sucking job. I now live in Paris to concentrate on art and writing. You’re so right: It’s more about not spending.

Janice, for years I used Microsoft Money…until they pulled the ripcord on their loyal users. I successfully transferred my Microsoft data to Quicken and now have a 10+ year history of spending. (I would have had more, but a prior computer died and I hadn’t been able to retrieve the data.) I link my credit cards, bank, and investment accounts to download new data and it automatically updates the share prices and activity. The catch is it may auto-classify things into the wrong category. For instance, my husband commutes from our home in the Chicago suburbs to NJ on M and F. If he stays at a Hilton, I would want that categorized as Job Expense. However, if the last time I downloaded a transaction from our credit card it was for our family’s stay at the Hilton, it will classify it as Vacation-Lodging. So although the downloading is convenient, if you have multiple categories as we do, you need to comb thru it and sometimes correct. Not to scare you off…but wanted full disclosure. I always hear great things about Mint, but I like our Quicken: obtain a Net Worth Report, print off check register details for all your accounts, easily get a report on your Investments showing cost vs market value, etc. I hope this helps and enjoy your new adventures in Paris!

My family of 6 spends close to $95k a year. We live in a $245k home in the midwest, spend $17,500 for mortgage. 4 kids will eat up your budget if you’re not careful. But protein costs are SOARING, so even if you only eat at home, we average $9-10 to make a meaty lasagna or pasta. We do eat out once a week which is $45-60 a pop. We only started doing that when my wife went back to work. She is a teacher and our health insurance has no premiums and is $10 for every doctor visit ($50 for ER). We have a loaded cable/internet package (everything but the HBOs and Showtimes etc) and we have 3 cell phones on a family data plan (4 next year when my 2nd oldest goes to middle school). I have thought long and about pulling the video plug ($95 per month). We spend probably $6-7k per year on vacations because we have family on the coasts. Flying 6 people is easily $1600 round trip, Home repairs:I recently spent $4k on two upstairs bedroom windows and that sucked. Cars: We have a mini van and sedan on lease. Our energy bill averages $250 while waste and water is another $70/mth.

Here’s the deal: Whatever we save each year, with 4 kids to put through college, that cash is going to disappear real quick. So we load up the max on 401ks and IRAs and whatever is left over is for college.

$9 for spaghetti and meatballs for six seems to indicate you’re all eating more protein at one sitting than is good for you.
Your $60 at the restaurant tells us you’re choosing a more upscale restaurant than the neighborhood diner. $60 saved per week is $3000 saved per year with which to invest.
Loaded cable does your kids no favors. They need to be more active, actually practicing real hobbies and skills that will help them in later life (such as house-building). Going to basic cable and a slower internet speed will generate enough funds to afford take-out pizza
Isn’t leasing a vehicle the more expensive method of acquiring transportation?
Cheer up; when your kids are in college, the two of you can move into a smaller, cheaper home.

Wow, that sounded judgmental. @TGDavis, I feel your pain. Our spending isn’t quite that high, but it’s in the same ballpark. I don’t know where you live, @phred, but where I live $45-60 (note he said $45-60, YOU said $60) for six people is not at all upscale. It costs $40 for my family of five to eat at Chipotle. And there’s no such thing as basic cable here; we also pay $90 a month for phone, internet, and TV, and eliminating TV would only save about $40 of that.

Aside from the excess of sodium in most restaurants served by a central commissary, there is also:
WORST
• Burrito, with carnitas, cilantro-lime rice, sour cream, roasted chili corn salsa, and cheese: “On the surface it’s not that bad, but anything with a burrito-size flour tortilla and sour cream has a lot of calories, sodium, and fat,” Kleiner says. A burrito built this way clocks in at 910 calories, 40 grams of both fat and cholesterol, and almost a full day’s worth of sodium.

SALADS
• Worst—lettuce, carnitas, pinto beans, chili-corn salsa, cheese, and chipotle-honey vinaigrette, with chips: “This salad is actually higher in fat and sodium than the worst meal on the menu,” Kleiner says. Between the pork, cheese, and honey-chipotle dressing, you’ll be eating 70 grams of fat, more than a day’s worth of sodium, and 1,330 calories if you have it with the chips (it’s 760 by itself).
If you eat instead at a local diner, your family of five could do it instead for $35. Just eat out once a month, and you save even more
Hard to believe you don’t have basic cable. Mine is always trying to upgrade me.
When we lived in Alabama, my wage income was $110k, I stupidly went full boat on the cable, put two kids through college, still saved 50%

With beef at over $4/lb, $9 for a lasagna for a family of 6 isn’t bad at all (although, a pasta without added expense of ricotta etc, will do you better)! Whenever possible, buy your meat in bulk (you can cut $.50/lb or more sometimes and that adds up greatly), and try ground turkey instead of beef– leaner and cheaper. And if you’re eating out to give your wife a break (high-five), consider ordering take-out! Your tip and drink expenses will be much less. (I totally understand where you’re coming from…we had to stop and eat on the way home from holiday travel, and my 8 yr old requested a foot-long, a sure sign of the food apocalypse to come in our house of 3 boys, and my husband replied calmly, “Son, if you’re old enough to eat a foot-long, you’re old enough to get a job.”:))MMM makes some suggestions for cell phone plans, which depending on your current plan, could cut that bill in half! And we got rid of cable and miss it ZERO. You won’t be sorry. We do Netflix for $8.99. As far as vehicles on lease–that’s a pretty expensive option…maybe do a little MMM reading on that. Don’t get discouraged:))

Ok, now I know my goal for the new year: Keep detailed track of spending. I’m embarrased to say my husband and I have never done this in 18 years of marriage. All of our income is accounted for, but the largest piece of my spending pie chart after mortgage is “credit card.” I think we can do better than that.

I am curious how much you receive in taxpayer subsidies? You mentioned that you have free phones and your health insurance is so low compared to what I pay and I live very frugally (no debt at all). Besides subsidized cell phones and healthcare, does your child receive free lunches at school, etc? I spend a few hundred at the grocery store per week just getting my kids lunch for school.

I too am trying to get my spending down to a lower level but I don’t see how it’s possible without taxpayer subsidies.

Very funny! No taxpayer subsidies here – it is called frugality. $100 per week could easily feed a whole family of four or more. And that is our whole, unsubsidized insurance bill. Read the “start here” article in the menu above, and keep reading. Welcome!

No point in giving up all luxuries; besides, I like lasagna. It’s just that the problem with store-bought (or restaurant – generally the same thing) lasagna is the boat load of chemicals that comes with it. Home-cooked lasagna generally provides more protein than is necessary at one sitting because we are gluttons and because it tastes s-o-o-o good.
Here’s a worthwhile recipe to use while we’re in haircut mode. It is from a site “A Girl Called Jack”. P stands for British pence; currently, 100 pence = $1.64. Minced means ground. Make two batches so you can freeze one for when you’re too tired to cook and decide to go to a restaurant (Gasp!). Add a small salad and some garlic toast
Makes 6 portions
2 tbsp oil, 6p
450g free-range pork mince, £2.50
1 onion, 11p
2 tsp mixed dried herbs, 3p
140g double concentrate tomato puree, 35p
400ml chicken stock, 2p
1 tbsp flour, 3p
2 tbsp dried skimmed milk and 200ml water, 5p (or 200ml milk)
Mozzarella, 22p
Lasagne sheets, 22p

• Heat 1 tbsp oil in a saucepan. Cook the mince, onions and herbs on a medium heat until the mince is browned and the onions are soft.

• Add the tomato puree and stock. Boil for a few minutes, ensuring the mince is cooked through. Leave to stand.

• For the white sauce, mix 1 tbsp oil with the flour and milk powder in a saucepan on a low heat for two minutes until it resembles breadcrumbs, then add a splash of water to make a paste. Stir well to eliminate any lumps, add a splash more water, and repeat until only half the water is left, stirring continuously to stop lumps from forming.

• Tear the cheese into small pieces, add to the pan, and increase the heat to melt in. Reduce back to a low heat and stir well.

• Layer the ragu sauce (the tomato sauce) in the bottom of your dish and lay the pasta sheets on top. Add a second layer of ragu, then pasta, then a thick layer of mozzarella sauce.

Dietitian and spokesperson for the British Dietetic Association, Sasha Watkins, gives her verdict: By cooking the meal from scratch you can use a better quality of meat, as Jack has. This homemade lasagne contains free-range pork and doesn’t break the bank. The key thing is control – you can keep an eye on the fat content, pouring away any excess from the pork mince, using less mozzarella, and exchanging full-fat for skimmed milk, as Jack has done here, to make a lasagne that is not only tasty but also better for your heart and waistline.

Congratulations for being able of having such a good results, because it seems that The States are quite more expensive that my country, Poland.

I am also on my way of cutting and investing. This year I could live with the equivalent of $11,500 counting taxes, and only $7,750 leaving taxes aside and allowing myself some small luxury (a travel, eating daily in restaurant for commodity) after one year of super-frugal lifestyle for being then unemployed.

It’s nice for me to see that people in other countries are also doing what I do. Congratulations for being retired at such age.

In my case, nevertheless, I have a little of way till, I only cover by now with investments a 20% of my expenses. I expect to arise it to 33% this year. At my rithm I expect to have the possibility of retiring at 35-40.

Well, *I’m* jealous. I’m 50, and I can’t see *ever* being able to retire… :-( I wish I had gotten out of credit card debt sooner than 2 years ago, or avoided such debt altogether. If I determined I would need $400K to retire, that’s 10 years of saving $40K per year. I barely MAKE that much, so saving that much is impossible at the moment. So then the choice is to lower your standards of living, or keep working, and hope that you can retire and still be healthy enough to ENJOY it. That’s a tough choice… Unless there’s another option I’m overlooking?

Hey Eldred, I was once retired, but went back to work because my hobbies don’t take up a full day. Part of my work is for pay, and part is for charity. I also take one or two college or adult ed courses every year.
What I’m trying to say is that retirement may not be all it’s cracked-up to be. Instead of being in budgeting mode, you need to decide what is that one big thing you want right now — right now – not 16 years from now. It could be to spend three weeks in Italy, it could be to take sailing lessons and then to acquire a 24 foot sailboat, it could be to acquire 80 acres in the country. This makes it easier. When you decide to stop and get that mocha latte every morning (plus Danish), ask yourself, “Is buying this getting me closer to my big thing?” Of course the answer is No. Do this for everything, and living like a poor student/starving artist won’t seem like such a trial because the big thing is getting closer to fruition every day
Saving is easier if you do it automatically. After your paycheck is direct deposited, have the bank automatically transfer a small bit into a savings account. When the savings grow, have Vanguard or similar transfer it to an investment account. Doing it this way, it will hardly be missed.
Good luck, and always remember Col. Sanders didn’t start Kentucky Fried Chicken until after retirement age

Somehow I had missed the earlier post on box wine, so following the link was a revelation to me. I perused the box wine section at my grocery store yesterday, and Bota Box is on sale there for $14.99 for the rest of the month. I got their cab sav to try with my boyfriend and his roommate, and it was delicious, so I’ll be back for a few more boxes while they’re on sale. They really are quite compact; I should be able to store the surplus in my linen closet.

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